U.S. firms urge new export policy for drones, change near

FARNBOROUGH England Fri Jul 18, 2014 11:32am EDT

FARNBOROUGH England (Reuters) - The U.S. government is nearing release of a revamped policy for exports of unmanned aerial vehicles and technology amid growing pressure by U.S. manufacturers who say the current cumbersome rules are giving firms in other countries a competitive edge.

U.S. officials at the Farnborough air show were tight-lipped about the details of any possible changes, but confirmed that there could be movement soon on the issue after years of behind-the-scenes deliberations.

"Please stay tuned," Ken Handelman, deputy assistant secretary of state for defense trade controls, told reporters earlier this week, although he declined to elaborate.

"We think there’ll be a lot to say in due course that is very helpful to exporters and also to our allies who are hoping to take advantage of the very good technology that U.S. companies produce."

U.S. curbs on unmanned technology exports have long vexed firms like Predator-maker General Atomics Corp, Textron Inc, which builds the Shadow unmanned systems used by the U.S. Army and Marine Corps, and Northrop Grumman, which builds the high-altitude Global Hawk aircraft.

The biggest obstacle is the Missile Technology Control Regime, or MTCR, a partnership among 34 countries established in 1987 to preventing the proliferation of missiles capable of carrying a 500 kg payload at least 300 km. The rules were amended in 1992 to include larger unmanned aerial vehicles.

New threats have emerged to replace those of the Cold War and Washington has been reluctant to tinker with the export controls for fear it may allow sensitive technology to fall into hostile hands.

The U.S. government has approved sales of certain unmanned systems to a few close allies, including Britain, South Korea, Italy, France, Germany, and Australia, but many other countries are interested in buying a range of systems.

Christopher Ames, head of international business development for General Atomics, told Reuters that countries that were not part of the MTCR agreement had a advantage in the burgeoning market for unmanned aircraft and related technologies while U.S. rules restricted sales of items now readily available elsewhere.

"These items are no long proprietary to the United States. The technology is developing, maturing and advancing," Ames said at the Farnborough air show. "This should be of concern if we want to maintain our position in the international marketplace."

Firms from Israel, South Africa, China and others have sharply increased their sales of unmanned vehicles and technologies over the past decade, while U.S. laws have kept a tight rein on U.S. sales.

Ellen Lord, president of Textron Systems, the Textron unit that includes various unmanned systems, said navigating U.S. export control laws remained a lengthy and complicated process despite some changes in recent years.

"The customers are shying away a bit, and they will go for inferior technology because of the ease with which they can process it," Lord told Reuters at the air show.

Lord said U.S. officials assured her at the show that they were aware of industry's concerns. She said she expected news about a policy changes within the next few weeks.

"No one is arguing that we need export controls, but let's be rational about it and let's look at where there's a national security threat or not," she added.

Air Force Secretary Deborah James said industry executives and foreign officials raised concerns during her meetings at the show. She said an inter-agency group was reviewing the process, which she described as "lengthy, and perhaps a little rigid."

"It's a difficult situation for us. It's a balancing act trying to protect very sensitive technologies but on the other hand, wanting to be able to export, and wanting our allies to ... have certain capabilities," she said.

(Editing by Tom Pfeiffer)